The IRS/CRA Income Tax Thread

[daisylynn 0]

Ok, so we've decided to just have our US taxes professionally done. It was just too involved and I couldn't figure out how to fill some of those forms out.

We're thinking the same for the Canadian taxes. I just tried to do it on Ufile to see if it matched what I got and it's coming up thousands of dollars more for a return. It seems to have accounted for the partial year and seems to have prorated the credits so I don't know what's going on.

My question-Does anyone know of where I can get my Cnd taxes done since I'm in the states? I would imagine trying to find one locally would be hard. Is there anyplace that will do them if I send in all the information? I just don't know what to do and am running out of time to figure it out.

Thanks!

[elsoar 3]

Hey y'all,

I would like some advice on a theoretical situation. I'm about to be a dual US-Canadian citizen, presently living in Canada and telecommuting to work for a company in Quebec. Presently I file taxes with the IRS (using the 2555 EZ to exclude my Canadian income), the CRA and Revenu Quebec. In the future we may be moving back to the US, and I may continue working for the Canadian company, while living in the US. The Canadian company does have a few people on contract in the US, but no employees, or business presence there, and I imagine they would continue to pay me in Canadian dollars, although perhaps to a US bank account. I would likely prefer to remain an employee (unless I learn it's better otherwise). In this case:

1) Would the Canadian company still withhold both federal and provincial taxes for me?

1a) If so, I understand that I would then file with the IRS using a foreign tax credit or deduction, to ensure I am not double taxed under the tax treaty.

1b) If so, would I continue to file taxes in all three locations (US, Canada, and QC)? I know from reading the rest of this thread I wouldn't normally continue to file Canadian taxes as a non-resident, but what about QC, is it the same (I would guess so)? Would I need to file a state tax return for whereever I would be living as well?

1c) If so, does that mean my returns would essentially look the same as they do now in terms of how much tax I end up paying to the various goverments?

2) Any guesses as to whether it would be more advantageous (eg, letting me keep more of my money) if I were to be considered a consultant rather than an employee of the same company in otherwise the same situation? (I assume the only difference would be that the company wouldn't withhold tax?)

3) Not tax related, but does anyone know how it would work in terms of health care benefits, eg, presently one benefit is health care coverage (on top of the provincial coverage, including prescription drug coverage). Would this coverage be able to continue if I was living in the US, or would I have to find my own private insurance in the US?

Thanks for any help or advice - or pointing me in the direction of finding my own answers even. I figure if anyone knows anything about this sort of situation it's someone on VJ!

Elly

[elsoar 3]

Another question: we both have RRSP accounts here in Canada and have been diligently paying into them (I have a continuous investment plan set up). Now that we are moving to the US, should we stop paying into them and start thinking about 401(k)? Would it make sense to leave the existing money in the RRSP but invest in future in the 401(k), thus hedging our bets?

I've never been a working adult in the US, just a summer break worker home from college and a part time job worker when in high school... Can someone give or point me to a quick overview on how a 401(k) works compared to an RRSP, which I clearly understand?

[elsoar 3]

Another question: we both have RRSP accounts here in Canada and have been diligently paying into them (I have a continuous investment plan set up). Now that we are moving to the US, should we stop paying into them and start thinking about 401(k)? Would it make sense to leave the existing money in the RRSP but invest in future in the 401(k), thus hedging our bets?

I've never been a working adult in the US, just a summer break worker home from college and a part time job worker when in high school... Can someone give or point me to a quick overview on how a 401(k) works compared to an RRSP, which I clearly understand?

Oops... According to Wikipedia, I wouldn't qualify for a 401(k) since I'm sure my Canadian employer wouldn't set one up -- does anyone know about Traditional or Roth IRAs vs. RRSPs? [Not sure why I couldn't edit the above post?]

Elly

[bootslacky 1]

I'm just wondering how I should fill out my W-4 form now that I'm married. My wife and I got married at the end of March 2009. We're beggining the process for an IR-1. It will be amazing if it finishes within the year. So, do I claim an excemption point for her not making income, since she isn't here?

How important is it to get the W-4 right at this stage in the game? I just attempted to fill it out and it confused me.

[Udella&Wiz 325]

Hey all - after reading through a zillion of these answers, I'm not sure I saw my exact situation.

In 2008 - I received only EI as Canadian foreign income and then I got a job in March and worked in the US for the remainder of the year.

Which forms am I completing to declare the Canadian EI income on my US tax return? 2555 AND 1116? or just 1116

[Udella&Wiz 325]

Bumping - anyone have a quyick answer to my questionny?

My only Cdn income last year was EI - so I'll file my Cdn return, but where on the US return. I'm 99% sure that 2555 isn't the approriate form because it details foreign income while you were a resident of that country - which I was not in Canada in 2008.

I 'THINK' that we need 1116 ....but when we fill it out...it just negatively affects our US tax return. It shouldn't - the Cdn income should cancel itself out, right?

I am seriously considering not even including my small bit of EI at all on my US return, I mean - how would they know and honestly I worked for 9 months of the year in the US and I am honestly filing my tax return for that income

We fought over our taxes until 8 pm last night

[S & J 0]

You are right, form 2555 would only have applied to you for 2007.

Your EI would be reported and then you would use 1116 to claim the foreign tax credit, so it does not cancel itself out, the FTC is supposed to offset the tax you will pay in the US. The problem is (I am assuming) is that your EI income is so low compared to the rest of your income that any foreign tax credits are minimal as 1116 prorates the credit. Form 1116 shouldn't negatively affect your return though....your are supposed to report the EI income, but form 1116 is optional.

Hope that helps.

[Udella&Wiz 325]

You are right, form 2555 would only have applied to you for 2007.

Your EI would be reported and then you would use 1116 to claim the foreign tax credit, so it does not cancel itself out, the FTC is supposed to offset the tax you will pay in the US. The problem is (I am assuming) is that your EI income is so low compared to the rest of your income that any foreign tax credits are minimal as 1116 prorates the credit. Form 1116 shouldn't negatively affect your return though....your are supposed to report the EI income, but form 1116 is optional.

Hope that helps.

Yes - I feel entirely guilty about not reporting it to the US (although then I have a second thought and realize that at least I paid taxes on it somewhere:) )

OK - so should I include it under my normal income and then do a 1116 form? Gotcha - perhaps that is our error, we didn't report it as part of my total income on the 1040.

It was about $6K so not huge, but not small - the way we have it at the moment it knocked off some of the refund we're expecting...boo hiss

[sandyn 0]

need help with filing

My DD married a South African Sept 2008. He started his VISA process in Nov. They had their interview the beginning of March and the agent wanted them to give a copy of their 2008 taxes

I am confused as to if he was a resident or nonresident alien for 2008

He worked in London from Jan- Mar 2008. He went back to SA and then came to the US on a cultural exchange visa in April. He worked on the exchange visa from April- July. They got married in Sept

Do they file jointly? That is what visa wants them to do. Does he claim his London income?

He also has some sort of account in London that may have been worth around 10K- he has to file paperwork for that too, correct?

[zyggy 9]

Two quick questions:

1) C. filed as a deemed non-resident of Canada last year. This year, he had some income in Canada though he is still a U.S. Resident. What Canadian tax form do we use? The same one as last year? (C. is disagreeing with me about this.)

If he had the non-resident tax withheld, the he doesn't file anything. If he had normal income tax taken out, he would file a non-resident return.

Oop, question #2: C. worked in Canada. He moved here in 2007, was a resident of the U.S. and Connecticut for all of 2008. This means form 1116, not 2555, right, for his foreign income?

Correct. YOu can't use 2555 anymore.

Hey,

I've been reading this thread looking for some answers but I just can't seem to find the answer to my questions. If you have answered these questions before, I apologize. But maybe someone could copy and paste the answers? LOL

My husband, US citizen, filed for his taxes separately. I will be getting my SSN any day. When I get it, I file file for my taxes separately as well. Since I am filing separately wiill I have to claim my husbands income? Also, I only have one copy of my Canadian T-4, will a photocopy of my T-4 be acceptable?

When doing my Canadian taxes, I recently told that I have to claim my husbands US income. Is that true?!

That's all. Thanks for the help

YOu should not have filed seperately. I would file an amended return and file jointly.

[zyggy 9]

USC, got married to my Canadian spouse in Oct '08, filing MFJ with her ~$4k of canadian income on the return as a W-2, with 1116 for the ~$250 tax credit.

TurboTax wants to add a $600 "Recovery rebate credit" which is the added stimulus check amount since I changed from single to married.

My question is, I know you didn't get a stimulus check last year if your return had an ITIN on it, does the "Recovery rebate credit" have the same gotcha? She's using an ITIN since she doesn't have a EAD/SSN yet.

Love this thread btw, saved me a lot of grief so far!

Is your spouse here yet? Had she immigtrated. If she has and she doesn't have a SSN yet, you should wait until she does. File for an extension and estimate how much you would if if that is the case.

Hi, I have a few questions. A pretty standard scenario, but I'm lost.

I moved from Canada to the US on a K-1 in October 2008. We got married in October 2008. I have Canadian employment income from January-October of 2008, then EI payments that I received after I was in the United States. I don't have a green card yet; the interview for that is later this month.

1. Where is the link to find the proper Canadian T1 form that I have to fill out?

2. Am I a non-resident, a deemed non-resident, or what?

3. Do I add my employment income to the EI income and submit all that, or does the EI income not need to be reported because the non-resident tax has already been deducted?

4. After I send this tax return to Canada CRA, do I ever have to correspond with them again?

5. What forms do I need for my US return? My wife didn't work in 2008 and all we have for income is interest income, capital gains (stock market), and the EI I received from Canada after I moved here.

Thank you so much for the help!

Read the entire thread. THe majority of your questions have already been answered.

I'm just wondering how I should fill out my W-4 form now that I'm married. My wife and I got married at the end of March 2009. We're beggining the process for an IR-1. It will be amazing if it finishes within the year. So, do I claim an excemption point for her not making income, since she isn't here?

How important is it to get the W-4 right at this stage in the game? I just attempted to fill it out and it confused me.

Use the WItholding Calculator on the IRS website. It's a great tool.

[zyggy 9]

Hey all - after reading through a zillion of these answers, I'm not sure I saw my exact situation.

In 2008 - I received only EI as Canadian foreign income and then I got a job in March and worked in the US for the remainder of the year.

Which forms am I completing to declare the Canadian EI income on my US tax return? 2555 AND 1116? or just 1116

WHen did you enter the US, if it was before Jan 2008, then your taxes in your EI income would be credited on 1116. ALso consider filing a Section 217 non-resident return to see if you can recover some of the 25% back.

[zyggy 9]

need help with filing

My DD married a South African Sept 2008. He started his VISA process in Nov. They had their interview the beginning of March and the agent wanted them to give a copy of their 2008 taxes

I am confused as to if he was a resident or nonresident alien for 2008

He worked in London from Jan- Mar 2008. He went back to SA and then came to the US on a cultural exchange visa in April. He worked on the exchange visa from April- July. They got married in Sept

Do they file jointly? That is what visa wants them to do. Does he claim his London income?

He also has some sort of account in London that may have been worth around 10K- he has to file paperwork for that too, correct?

DId he file as married? He has the choice of either filing as joint or separate. He would be considered a non-resident alien. If he was paid in the US from April to July he may have a requirement to file a 1040-NR. If that is the case, it may be beneficial to opt to treat the alien spouse as a resident alien for tax purposes and exclude the foreign earned income.

[zyggy 9]

Bumping - anyone have a quyick answer to my questionny?

My only Cdn income last year was EI - so I'll file my Cdn return, but where on the US return. I'm 99% sure that 2555 isn't the approriate form because it details foreign income while you were a resident of that country - which I was not in Canada in 2008.

I 'THINK' that we need 1116 ....but when we fill it out...it just negatively affects our US tax return. It shouldn't - the Cdn income should cancel itself out, right?

I am seriously considering not even including my small bit of EI at all on my US return, I mean - how would they know and honestly I worked for 9 months of the year in the US and I am honestly filing my tax return for that income

We fought over our taxes until 8 pm last night

I can only tell you what the law says, as a resident alien of the US, you must report ALL of your earned income whether it be from foreign sources or not.

Whether you report it or not is a rsk analysis for yourselves. Is a few bucks of refund worth the possible penalties and interest not to mention the harm it could cause on your chances for citizenship or to remain in the US if they ever found out your withheld it. It's a low risk, high penalty position.

Your choice.

Hey y'all,

I would like some advice on a theoretical situation. I'm about to be a dual US-Canadian citizen, presently living in Canada and telecommuting to work for a company in Quebec. Presently I file taxes with the IRS (using the 2555 EZ to exclude my Canadian income), the CRA and Revenu Quebec. In the future we may be moving back to the US, and I may continue working for the Canadian company, while living in the US. The Canadian company does have a few people on contract in the US, but no employees, or business presence there, and I imagine they would continue to pay me in Canadian dollars, although perhaps to a US bank account. I would likely prefer to remain an employee (unless I learn it's better otherwise). In this case:

1) Would the Canadian company still withhold both federal and provincial taxes for me?

1a) If so, I understand that I would then file with the IRS using a foreign tax credit or deduction, to ensure I am not double taxed under the tax treaty.

1b) If so, would I continue to file taxes in all three locations (US, Canada, and QC)? I know from reading the rest of this thread I wouldn't normally continue to file Canadian taxes as a non-resident, but what about QC, is it the same (I would guess so)? Would I need to file a state tax return for whereever I would be living as well?

1c) If so, does that mean my returns would essentially look the same as they do now in terms of how much tax I end up paying to the various goverments?

2) Any guesses as to whether it would be more advantageous (eg, letting me keep more of my money) if I were to be considered a consultant rather than an employee of the same company in otherwise the same situation? (I assume the only difference would be that the company wouldn't withhold tax?)

3) Not tax related, but does anyone know how it would work in terms of health care benefits, eg, presently one benefit is health care coverage (on top of the provincial coverage, including prescription drug coverage). Would this coverage be able to continue if I was living in the US, or would I have to find my own private insurance in the US?

Thanks for any help or advice - or pointing me in the direction of finding my own answers even. I figure if anyone knows anything about this sort of situation it's someone on VJ!

Elly

THese are very good questions and should be discussed with ah cross border tax expert. There are probably a few of them in Montreal or by another border city.

Based on the brief info, I know what my instincts tell me, but the devil is in the details.